You're going to buy a house
where?!?

This is the reaction you might get when you tell your friends you are
thinking of buying in Mexico. There have been horror stories around for years,
and they still exist today. Let me assure you, you CAN buy safely in Mexico. I
have owned here since 1989. I have many friends who have owned here for over 30
years with no problems. All you need to do to protect yourself is FOLLOW THE
MEXICAN LAWS!

Misconception: "You can't really buy property in Mexico, you have to
lease it." Not true! You DO buy, but under a Bank Trust called a
FIDEICOMISO. YOU own the property for the term of the trust (50 years) and you
or your survivors can renew for another 50 years. The bank is the trustee and
you are the beneficiary of the trust. It would take an act of congress to change
this law! It is not going to be changed on a whim. It has been in effect for 30
years.

It is important to note that Real Estate personnel in Mexico are NOT YET
licensed. There is, however, a group called AMPI (Associan Mexicano Professional
Imobilarios) which is like a realtor in the U.S. We belong to this association
and I suggest you ONLY deal with members of AMPI. We have a code of ethics and
it is enforced. Others in the real estate business here may change prices, not
have contracts, not do all the steps necessary, etc. AMPI also has a multiple
listing service here.

The secret to SAFELY buying in Mexico is to have a good broker and a GOOD
Notario Publico. This is vital! The Notario is an attorney who specializes in
real estate, then must apply to the Mexican government and be appointed and
registered. This is the key! We use only two Notarios as we have years of
experience with them.

The steps to buying are:

1. Select a broker you are comfortable with.

2. Take the time to find the right house, in the right area, at the
right price.

3. The broker will prepare a contract to purchase (must be in Spanish).

4. Put down an earnest money deposit of 5% of the purchase price. This
is non-refundable IF your offer is accepted.

5. After acceptance, sit back and relax. It normally takes from 30 to
90 days for all the paperwork to be done (usually 60 days).

Costs of buying in Mexico:

1. The purchase price of the property.

2. The cost of the Bank Trust (right now, a one-time cost of about
$2,000 USD including the first year fee). After that, it costs about $350.00 per
year.

3. The fees to the Notario Publico for
title search, lien search, deed preparation, deed registration, etc. Some of
these fees are fixed and some are a percentage of the sales price. We recommend
using a figure of 5%. The more expensive the property, the lower that will go,
but use 5% as a guide and the surprise will be a pleasant one! He will
also pay the transfer tax for you. This tax is paid by the buyer here in Mexico.
All these costs are included in his fees.

If someone says they have another way to buy property where you don't have to
pay for a Bank Trust, run screaming from the room!

Taxes

I was recently asked to explain a bit about
property taxes in Mexico. (Thank you Larry.) In general, property taxes in
Mexico are so low that we long timers tend to forget to mention them. They do
exist, but are (compared to the US) extremely low. They are due yearly and you
must go to the tax office with an old tax bill to pay them. They do not send you
a bill until you are late. Property taxes on the average American-owned house
(generally up-scale, usually about 2000 plus square feet in a nicer area) are
normally around $200 US to $300 US. I have several clients who have decent
homes and condos whose tax bill is under $150 per year. The basic tax bill can
be reduced by paying early (in January) and requesting a reduction as your
primary residence. This reduction can amount to as much as 50%.

Utilities

Your water and sewer bill are combined and paid
to JUMAPAM (the city water company). Sewer is based on water usage. What goes
in, must come out.

Gas in Mazatlan is bottled propane. There are two
types of tanks. The 4 foot high cylinders which are changed each time they run
out. Or a fixed tank, usually about 200 gallons. Either way, most people here
are using between ten and fifteen dollars per month in gas. Less in the summer
months. Paid to private companies.

Electricity is another matter entirely. This is
very hard to predict as there are different rates (higher in the Gold Zone,
lower downtown) and usage varies depending on many factors. All homes are built
pretty much the same with concrete and brick. Most homes have air conditioners
just in the bedrooms. Some have central air. Some people suffer (or prefer not
to suffer) in the summer and consequently run their units all day and all night.
Personally I have units only in my bedrooms and run them only at night when I go
to bed. Some days it does get really hot and I go to bed VERY EARLY! Normally my
bill runs around $50 per month, but has gone as high as $150. Keep in mind, my
house is nearly 4500 square feet and I have a BIG pump on my swimming pool that
runs several hours per day. This is paid to CFE, a federal electric company.